International trade data released today by the Australian Bureau of Statistics (ABS) show that Australia recorded a seasonally adjusted trade deficit on goods and services of $2995 million in December, up from a deficit of $1106 million in November.
The major contributor to this increase in the trade deficit was $1.3 billion of civil aircraft imports. This is the highest monthly value of aircraft imports since this series began in 1981. While the ABS only publishes an aggregate number for aircraft imports, the higher number for December primarily relates to the import of several large aircraft by major airlines. Imports of civil aircraft will remain strong in coming months as major airlines continue their well-publicised programs of fleet expansion and renewal.
Imports of intermediate goods were also higher in December, increasing by $328 million from November in seasonally adjusted terms. This partly reflects the impact of higher oil prices towards the end of 2002. World oil prices have also remained high into the new year, but their impact is partly offset by the recent appreciation of the Australian dollar.
Exports of rural goods fell by a seasonally adjusted $217 million in December as a result of drought, mainly reflected in lower exports of grains and cereals. Exports of grains and cereals fell from a high of $666 million in January 2002 to $270 million in December (non-seasonally adjusted data). The continuing drought conditions in much of Australia and the smoothing of exports by some rural marketing authorities mean that rural exports will remain weak well into 2003.
Today's trade data, whilst reflecting the impact of drought on exports, show that solid growth in the non-rural sector is leading to strong imports of capital and intermediate goods. Nonetheless, sustained recovery in the world economy is important for export growth, together with more advantageous climatic conditions through the course of 2003.